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updated 12/7/2006 3:07:57 PM ET 2006-12-07T20:07:57

The Matrix Group, a Web design company in northern Virginia, prides itself on its fun and relaxed atmosphere. Throughout the year, employees are encouraged to let their pets spend the day in the office, and the annual company scavenger hunt has employees scouring for odd and obscure things like the UPC code from The Matrix DVD and pictures of clients' office buildings. But there's a line, and it was crossed during the firm's holiday gift exchange. One employee's idea of a gag gift: a pair of plastic fake breasts. "We tossed them in the garbage," says Joanna Pineda, founder of the Matrix Group. "I sat down with the person and said, 'Not a good idea.'"

There's no way of telling how many office-present faux pas are committed each holiday season. To avoid becoming part of your firm's hall of shame, remember that when shopping, be nice, not naughty. Whether your office is doing a company-wide gift exchange or you're buying something for a colleague, let the fake breasts be a lesson: Gifts shouldn't be offensive.

Unfortunately, even innocent intentions can be misinterpreted. That was the case with one of Marjorie Brody's male colleagues. He knew his administrative assistant liked a certain brand of body lotion, so he figured it was a thoughtful gift. "Her reaction was, 'Eeew,'" says Brody, president of a professional development firm.

There are so many questions surrounding office holiday gifts. Whom should you buy for, and how much should you spend? Brody's first rule: Don't feel obligated to buy for anyone at the office. If someone gives you a gift and you didn't buy one for them, make sure you write a thank-you note. Don't go out and buy something at lunch.

If you want to buy your boss or a special colleague a gift, make sure it's modest. Bosses know how much you make and tend to feel uncomfortable with lavish presents. Plus, you don't want to look like you're kissing up. Avoid that by purchasing a group gift with other office mates. Try to be thoughtful about the gift — don't buy a bottle of wine if you know your boss is trying to cut down his or her alcohol intake. Does your boss love coffee? How about a bag of high-quality coffee beans with a mug? Maybe he or she enjoys reading a certain author or magazine? How about the author's latest book or a magazine subscription? Another way to show appreciation is by bringing in homemade baked goods. What office doesn't want a fresh batch of cookies? Handwritten cards are also an effective way to impart holiday cheer.

Many bosses wonder how they should show their staff they're appreciated. Sherri Athay, author of Present Perfect: Unforgettable Gifts for Every Occasion, says a little time off is always appreciated. Close the office early and have a pizza party, or just give the staff an afternoon off. "Companies can really create a lot of good will and loyalty, and it doesn't take that much to do it," says Athay.

Pineda, of Matrix Group, has a thoughtful system for thanking her employees. Each year, she gets the entire staff — now close to 40 people — the same item. One year, it was a denim button-down shirt with the company's logo; another year, it was a fleece blanket. This year, she's thinking stadium seats. Over the years, they've become a badge of honor in determining who has seniority. "What's interesting about these gifts is they really covet them," says Pineda. "They say, 'I've been here a really long time — I have the polo shirt.' Or, 'You haven't been here that long — you didn't get the fleece.'"

Don't forget to include the interns. They do a lot of work, often at no pay. A handwritten note is a great place to start. If you've got a particularly diligent intern, there's always a gift card to a bookstore or a nice restaurant.

As Mom used to say: It's the thought that counts.

© 2012 Forbes.com

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